As wind turbine fleets age, many companies will need to implement new operations and maintenance (O&M) solutions to manage increasing costs and complexity, and to keep up with the pace of change in the industry.

In this post, we talk with Austin Schroll, senior director of service sales for Vestas Americas, about the changing nature of servicing wind turbine fleets and how companies can best leverage their resources.

With wind turbine fleets aging and costs to maintain them growing, what does this mean for the O&M industry in 2019?

Nearly 45%, about 40 gigawatts (GW), of today's turbines were installed between 2005 and 2011. And the exponential technological innovation over that same period of time, which continues today, means the turbines of five, 10 and 15 years ago barely resemble the turbines of today.

That rapid technology evolution is challenging the O&M industry to similarly innovate and adapt our business models and capabilities in response.

Think about the turbine equipment like a car engine. The engines of today are not the same as yesterday. Just because you understand how to fix your 1985 Ford doesn’t mean you’re able to troubleshoot your Tesla.

The industry is going to need to grapple with the complexities of servicing both an aging and increasingly complex fleet. Owners now have portfolios that include not only multi-brand turbine, but also original equipment manufacturers (OEMs) that are no longer active and fleets where the turbines and technology on older projects barely resemble the machines on newer projects.

To successfully address that complexity and get the best performance out of the fleet, our industry needs to harness the same innovative mentality that changed the turbine game and apply it to the service market.

That requires pairing experience with scalability to service today’s market effectively and coherently. That’s a reality that will drive consolidation in the industry as bigger and more complex opportunities require agile providers to meet the demands of an increasingly complex market.

In 2018, O&M contracts were either short (1-2 years) or long term (10+ years). What is the reason for this gap and do you think it will continue or are you expecting contract terms to shift?

Simply put, the gap reflects two different types of customers with different risk assumptions, operational needs and service preferences. As the wind industry grows and more companies get into wind ownership, O&M partners need to be flexible enough to meet those divergent needs in a cost-effective way.

There are still owners who are committed to self-performing after the initial warranty period. And there are newer owner types, such as commercial and industrial, who are less comfortable with initial long-term agreements. They tend to prefer shorter-term contracts upfront, but we’re seeing a pivot toward long-term renewals after those initial warranty periods expire.

That trend toward longer-term agreements will continue as more and more owners grapple with the challenges and risks associated with shorter-term contracts, and the operational and logistical requirements needed to take on O&M responsibilities. Managing the workforce, supply chain and scale of operations required to service a multi-brand fleet requires a lot of investment and commitment. As OEMs, such as Vestas, expand and invest in operations and maintenance solutions, asset owners will be keen to partner with service providers to maximize and leverage the scale of their operations.

Turbines don’t run themselves. After a short-term contract ends, owners need to prepare for the inevitable downturn in performance as they ramp up ability to self-perform.

Owners need to weigh what type of service contract enables project financing and which partners can best leverage scope and procurement capabilities to build a cost-effective supply chains. They’ll also need to consider who can invest in managing the necessary workforce and equipment when calculating what type of O&M contract is best for their assets.

There will always be a need for flexible O&M offerings tailored to fit differing risk appetites.

Successful O&M partners will deeply understand their customers’ operational needs and business cases, and operate from the core belief that customers’ successes are theirs as well. Our interests align with our customers, and we don’t waste time in bickering over whose wallet each dollar comes out of, but instead focus on partnering with our customers to maximize each site’s performance.

What new O&M technologies are being deployed to help reduce costs?

At Vestas we’re focused on leveraging the same investment in innovation and research and development that has driven our technology evolution to help our O&M business reduce costs and optimize equipment performance. That’s tens of millions of dollars annually being invested in innovation to drive down O&M costs and improve turbine performance. And in the same way that we are moving beyond being an equipment manufacturer to being an energy solutions provider across the entire energy value chain, we’re positioning ourselves to be a fleetwide service provider, improving O&M costs and performance through end-to-end collaboration across the entire value chain and all turbine platforms.

That includes building strong partnerships with key suppliers on major correctives and major component repairs, like our recent partnership with ZF on gearbox solutions. It also includes strong investments in digital solutions and data analytics, via our acquisition of Utopus Insights, to offer customers digital solutions to deliver greater predictability, increased renewable energy production, more efficient operations and better integration with energy grids.

Those types of partnerships are examples of the ways in which service providers will need to leverage their abilities to invest across their scales, unlock the insights gained from analyzing the installed fleets and then share that added value with customers.

Many are predicting increased competition and/or consolidation in the services industry as wind turbine fleets grow and more emphasis is put on operations. What are some of the key things firms are doing to stay ahead of the competition?

Being able to pull or influence all the cost of energy “levers” will be critical to staying competitive. As wind technology and energy systems become more complex, O&M providers need to show they can manage those complexities while improving predictability and reducing costs, across not only multi-brand wind fleets, but also across various types of energy such as wind and solar.

That involves becoming true partners with customers, understanding their business model from cradle to grave, leveraging scale and procurement power to drive down costs, and utilizing digital tools to increase their operational agility.

In 2021, it's expected that operational expenses will surpass capital spending. What does this mean for the services industry?

The market of tomorrow will require providers to do more than individual plant operations. It will require providers that can offer entire energy systems operations.

To extract the most value out of projects, service providers need to move beyond optimizing output from individual generation assets into being able to efficiently orchestrate a portfolio of resources across multiple sites and equipment types.

That means being an energy solutions provider, not just a wind solutions provider. Most of our customers have wind, solar and other energy generation sources in their portfolio, and those customers want partners that can service their entire system of energy assets.

It’s an exciting time to be sure, and a time when adaptability, agility and innovation will be key to successfully meeting the needs of this increasingly complex and constantly evolving industry.

Austin Schroll is senior director of service sales for Vestas Americas, where he leads the team responsible for all North American service sales. He previously served as senior business development manager for the WTG sales division. Prior to joining Vestas, he was regional sales manager for ABB, where he was responsible for new and existing business development and sales across multiple power and automation technology business units.